S. 3561 — Buy Now, Pay Later Protection Act of 2025

This section defines a "buy now, pay later loan" under the Truth in Lending Act (TILA) (15 U.S.C. 1602(ff)) as a closed-end consumer loan for a retail transaction that is repaid in not more than four interest-free installments and does not impose a finance charge. (As background, TILA generally requires disclosures of credit terms to consumers and provides protections such as billing error resolution and defenses against sellers for open-end consumer credit plans (i.e., credit cards); buy now, pay later loans were previously exempt as they typically involve no finance charge and four or fewer installments.) The section further (1) applies TILA open-end credit disclosure requirements in sections 127(a) and (b) (15 U.S.C. 1637(a), (b)) to buy now, pay later loans; (2) extends billing dispute and seller defense rights under section 170 (15 U.S.C. 1666i)—including updating the section heading to "Rights of credit card customers and buy now, pay later loan customers"—to such loans; (3) applies billing error resolution procedures under section 161 (15 U.S.C. 1666) to buy now, pay later loans; and (4) extends limits on liability for unauthorized use under section 171(a) (15 U.S.C. 1666i-1) to buy now, pay later loans. (Thus, consumers using buy now, pay later loans gain credit card-like protections against billing errors, unauthorized use, and seller disputes.) This section directs the Consumer Financial Protection Bureau to issue implementing regulations within one year of enactment.

This section expands the supervisory authority of the Consumer Financial Protection Bureau (CFPB) under the Consumer Financial Protection Act to include covered persons who offer or provide buy now, pay later loans, as defined in the Truth in Lending Act. (Thus, the CFPB may require reports from and conduct periodic examinations of such providers to assess compliance with federal consumer financial laws, detect and assess risks to consumers and markets, and obtain information on their activities and procedures.)